Contracts for Differences (CFDs) is an investment instrument developed to allow market traders the benefits of possessing Shares, Indices, Forex, and Commodity positions without actually owning the underlying instrument itself. The market trader enters into a contract with a CFD at a specific price, and the difference between that price and the price that it is closed at is settled in cash - hence the name “Contract for Difference” or CFD.
You decide that you want to buy Google Shares. Instead of purchasing 1,000 Shares of Google from a Stockbroker, you buy 1,000 CFDs of Google on the X90 trading platform. If there is a $5 per share fall in the price of Google, you would receive a $5,000 loss. However, if there is a $5 per share rise in the price of Google, you would receive a $5,000 profit, exactly as if you had purchased the actual shares.
With CFD trading, you can profit no matter which way the market moves, as long as you’ve made the correct prediction regarding the movement’s direction. You can use CFDs to go “short” when you believe markets will fall (and close the position later by selling), or you can go “long” when you expect prices to rise (and close the position later by buying). Of course, selling at a higher/lower price than the purchase price produces a gain/loss accordingly.
CFD trading is increasingly growing in popularity over the past few years and we believe it is one of the best ways to trade the financial markets.
There are many advantages to trading CFDs at X90.com.